The Economics of Happiness

1. The Economics of Happiness Group G

2. Overview • Mark Anielski has served as an economic policy advisor to the Alberta Government and is recognized as a “rising star” amongst international progressive economists. • Much of his work revolves around developing alternative measures of economic progress.

3. Overview • Anielski describes The Economics of Happiness as having 4 main goals:

4. 1. Explore the nature and spirit of the current economic system. • Anielski questions conventional definitions of “wealth” and “value”, and looks into developing a better system of measuring human progress. • “While the GNP might be great at adding up all the money we spend on goods and services in an economy, it was a lousy measure of what mattered most to Americans: their quality of life.” – Robert Kennedy

5. 1. Explore the nature and spirit of the current economic system. • Anielski looks into creating a system of “well-being accounting” that would measure the actual physical and qualitative conditions of well-being. • This involves new forms of capital accounting: Human capital(time, knowledge, and health). Social capital(trust and strength of relationships).

6. 2. Introduce the concept of Genuine Wealth. • The book describes Genuine Wealth as “the conditions of well-being that are true to the core values of our life.” • Genuine Wealth creates a more complete method of measurement where the effects of human, social, natural, built and financial capital are all taken into account.

7. 2. Introduce the concept of Genuine Wealth. • Anielski constructed a large database based on to determine whether the US as a whole is better off in 2001 than it was in 1950 based on Genuine Progress Indicators. He looked at typical indicators such as life expectancy and personal income, as well as Genuine Wealth indicators such as self-rated happiness and youth suicide rates.

8. 2. Introduce the concept of Genuine Wealth. • He found that many of the Genuine Wealth areas have substantially worsened despite the fact that the US GDP and financial markets have boomed. • The number of Americans who say they are “very happy” has declined from 35% in 1957 to 30% in 2002, and the youth suicide rate has almost tripled.

9. 3. Illustrate examples of the Genuine Wealth model. • The Genuine Wealth model is based on what we value in life the most:

10. 3. Illustrate examples of the Genuine Wealth model. It has five fundamental principles: • True wealth represents all things that make life worthwhile, not simply monetary or material possessions. • True wealth is abundant, not scarce. • True wealth is more abundant when freely given and freely received through the spirit of reciprocity. • True wealth ultimately comes as a gift from God; each one of us has a responsibility to be co-stewards with God for this wealth. • The management of our genuine wealth is grounded in sustaining the integrity and vitality of the assets which contribute most to our pursuit of love and happiness.

11. 3. Illustrate examples of the Genuine Wealth model. • The process of Genuine Wealth Assessment (GWA) begins by us asking ourselves the questions: How’s life? What’s going well in life? What areas would we like improved? • At the same time, we take into account the principles that guide our lives, such as laws. • It is essentially a measure of our self-satisfaction.

12. 3. Illustrate examples of the Genuine Wealth model.

13. 3. Illustrate examples of the Genuine Wealth model. • A Personal Genuine Wealth Assessmentinvolves examining ourselves in a light mirrorand a dark mirror. • In the light mirror, we examine what we love about ourselves ad what others love about us. • In the dark mirror, we look at the things we don’t like about ourselves or what others dislike about us. • Ultimately, these mirror images help to create a complete and honest profile of our physical, mental, emotion, and spiritual well-being.

14. 3. Illustrate examples of the Genuine Wealth model. In conducting a personal Genuine Wealth Assessment, we identify strengths and areas needing improvement in our personal lives as well as the strengths and weaknesses of our professional and work life. Each of us will define “the good life” from our own unique perspective and experience.

15. 4. Examine the nature of money and our current debt-based banking system. • The power to create money no longer resides with us but rather is increasingly concentrated in the hands of a few private banks. Money is no longer backed by anything real.

16. 4. Examine the nature of money and our current debt-based banking system • This leads Anielski to the belief that money should be created to support the conditions of the 5 capitals in the Genuine Wealth Accounting System:

17. 4. Examine the nature of money and our current debt-based banking system What is Money? • Money is a medium of exchange, store of value and unit of account. In Reality... • Money is not a thing and has no inherent value. • It is not real or tied to anything of real substance or genuine wealth.

18. 4. Examine the nature of money and our current debt-based banking system How is Money Created? • Money is literally created out of nothing when the private bank issues a mortgage, a student loan, or a business loan or the government prints money and issues a government debt bond. • This debt based system of money is only a recent phenomenon.

19. 4. Examine the nature of money and our current debt-based banking system. • Charging of interest, or usury, on a loan refers to the transfer of real wealth from the debtor to the lender. • Until recent times, Christianity outlawed usury, as it was a sin.

20. 4. Examine the nature of money and our current debt-based banking system • On average we pay 50% interest on all prices of goods and services • If interest charges on all debts were eliminated, we would likely have to work at least 50% less Interest Charges Usury

21. 4. Examine the nature of money and our current debt-based banking system Vision for Genuine Wealth Economy:

22. 4. Examine the nature of money and our current debt-based banking system. • Real life example: the JAK Members Bank of Sweden provides members with interest free loans. • Members share their savings. • Ultimate goal is to abolish interest as an economic instrument and to replace it with means which help its members build healthy and sustainable communities.

23. The Economics of Happiness • GDP does not measure the ends of happiness, love, or spiritual engagement. Having healthy relationships, good and hopefully meaningful jobs, and trusting work places makes people happier.

24. The Economics of Happiness • Does money buy happiness? • Once people have met most of their basic material needs for life, money doesn’t translate into either more objective or subjective well-being or happiness.

25. The Economics of Happiness From Andrew Oswald’s research: An employee earning $10,000 becomes happier when offered another $10,000 BUTa person earning $100,000 doesn’t have the same rise in happiness with another $100,000 According to Yale University professor, Robert Lane: In affluent countries, the correlation between income and happiness is close to zero.

26. The Economics of Happiness

27. Ethical Issues • Anielski’s book addresses the issue that economics is studied as if it has nothing to do with people, when economic systems are ultimately the ways in which people are related. • Takes a moral point of view to factor people into the study of economics human wealth social wealth environmental wealth

28. Ethical Issues • Genuine Wealth Model makes it harder for corporations to act immorally by integrating all accounting, HR, environmental performance and corporate information: Integrated 5 capitals balance sheet Full cost-benefit sustainable income statement Sustainable progress indicators Genuine progress or sustainability report

29. Ethical Issues • It will be easier for companies to exercise corporate social responsibility because the moral obligations will be demanded by society. If a company wants to improve the welfare of its employees it will have a more effective way to measure it, without just seeing the loss in profits.

30. Critique • Overall, the book is well written and makes a good case for the switch to wealth accounting standards. • Good examples were presented, in particular the JAK Members Bank of Sweden example. • Evidence such as the GPI database is also effective in illustrating Anielski’s points.

31. Critique • The Economics of Happiness is definitely a major contribution to the field of “happiness economics”, as this is a relatively new and untouched field. • Much of Anielski’s evidence comes from research that he did himself and had never been done before.

32. Critique • This book raises many questions regarding the future of business, government, money and wealth. • What is the future of accounting? How will standards change in the future? • How will governments create and maintain wealth? Will the economy still be debt-driven in the future? • What role will money play in the future? Will it still be the main indicator of wealth as it is today? • How will wealth be defined in the future?

33. Personal Perspective • Anielski makes many interesting comments about wealth and money, and in particular, his concept of Genuine Wealth could help governments, corporations and individuals better account for their true wealth in the future.

34. Personal Perspective • His insights into whether or not money can buy happiness are also particularly interesting, as money is often the motivator for ethically questionable actions. As we have seen, people often sacrifice their well-being or the well-being of others for more money.

35. Personal Perspective • Ultimately, Anielski’s concept of Genuine Wealth is an interesting idea, but implementing it would be unrealistic. • Human and social capital is difficult to measure, and it would be even more difficult to ensure that they are measured consistently by different people. • It would be difficult to convince banks to stop charging interest.

36. Possible Improvements • Although Anielski has plenty of interesting ideas, he does not fully explain how these ideas could be implemented. • For example, well-being accounting could be a very good idea, but how can businesses seamlessly switch from traditional accounting to this new way? • JAK Members Bank of Sweden is an interesting case, but how could a regular bank switch to this sort of lending format without any negative consequences?

37. Possible Improvements • Anielski describes how Genuine Wealth gives a better overall picture of wealth, but fails to illustrate a clear and consistent way of measuring intangibles such as “happiness” besides surveying self-satisfaction.

38. Possible Improvements • Anielski goes into great detail about how our “picture of progress” is flawed. However, he does not clearly indicate ways in which well-being accounting or Genuine Wealth would improve the situation. • He does a good job describing the benefits of these things, but doesn’t leave the reader wanting to switch away from the current system.

39. Thank you! Questions?